BEEF UPDATES | Beef farmgate prices level off

It's typical for the local market to lead the way at this time of year. US imported 95CL beef prices have shown some upward movement in recent weeks. But the NZ dollar has strengthened significantly against the greenback which has really put the brakes on works prices which are typically rising at this stage of the season. The flow of cattle into meat companies has also been above last year levels until recently. This has held back procurement competition with a lower proportion of market returns making it back to the farmgate than typical at this time of year. However kill rates have moved below last years level now and meat companies are starting to compete more strongly again. iFarm is expecting works prices to peak this spring at around $4.50/kg in the north and $4.30/kg in the south.

US beef market under pressure due to drought

The deteriorating pasture and crop conditions in the US have caused corn and grain prices to sky rocket internationally and US cattle prices to drift lower. Purchasers of feeder cattle are forcing prices lower to offset the anticipated higher feed costs. The US cow kill has also picked up as farmers offload due to concerns over feed supplies through the rest of the summer and the coming winter. US domestic manufacturing beef prices took a tumble this week of US8c/lb. It's believed they could fall another 15c/lb between now and early Sept. However, imported beef may well withstand this downward pressure as there are limited imported supplies and increased demand for manufacturing beef after the fallout over lean finely textured beef.

Local demand for beef under fire

Local trade is showing more promise than export at the moment which is helping drive store R2yr heifer prices. In the past few weeks, local trade prices have edged higher, but traders should proceed with caution as the peak may not be as high as many hope. Demand is flat for prime beef, and this is even becoming apparent in the domestic market. Beef is struggling to compete with other proteins in NZ supermarkets. Lamb has even become more competitive, since exporters are trying to clear their full freezers by offloading more products onto the domestic market at competitive prices.